A Texas appeals court reversed a decision by regulators to keep electricity prices elevated at the maximum level allowed during a deadly February 2021 freeze in a big win for generators including Vistra Corp.
(Bloomberg) — A Texas appeals court reversed a decision by regulators to keep electricity prices elevated at the maximum level allowed during a deadly February 2021 freeze in a big win for generators including Vistra Corp.
The court said the Public Utility Commission of Texas exceeded its authority by keeping prices set at the $9,000 per megawatt price cap during the storm as the cost of electricity spiked because too many plants couldn’t operate.
“The commission here exceeded the legislature’s limits on its power,” the court wrote.
The decision has far-reaching implications. Some of the state’s biggest power generators whose plants froze up during the storm were forced to buy electricity at exorbitant prices to meet contractual obligations. The ruling could open the door for them to claw back some of that money, potentially prompting the reallocation of billions of dollars and introducing uncertainty for power traders and others more than two years after the storm.
The winter freeze triggered widespread blackouts, killed more than 200 people and left Texas crippled for nearly a week.
“It’s unclear how repricing would even work,” said David Naylor, of Rayburn Country Electric, an electric cooperative in the state. “How a repricing would occur is going to be a complicated process.”
The consequences of the decision remained uncertain given the court remanded the case for further proceedings. The Public Utility Commission of Texas has the ability to appeal to the Texas Supreme Court. It declined to comment on the ruling.
Shares of Texas’s biggest power-plant operators rose on the news, trimming earlier losses. Vistra was down 2.3% at 3 p.m. in New York after earlier being down as much as 4.4%. NRG Energy Inc. was down 1.2% after earlier falling 1.7%.
The case was brought by Vistra. “This is an ongoing legal proceeding and we cannot predict the final outcome,” company spokeswoman Meranda Cohn said in an email.
–With assistance from Madlin Mekelburg and Mark Chediak.
(Updates with details starting in fourth paragraph.)
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